Topic: INFORMATION FROM RELATIONSHIP LENDING: EVIDENCE FROM CHINA
Presenter：Prof. Chun Chang, Associate Dean, Chairman of Finance and Accounting Department, ABN AMRO Chair Professor in Risk Management, China Europe International Business School |
Time: November 14, 2008（Friday）3：00—4：30 PM
Venue: Room 513, Jiageng Bld 2
Chair：Zhe Shen, assistant professor in finance, IFAS
Abstract：
In this paper we study the economic role of banks’ soft information, evolved from repeated lending relationships, in the context of loan default. Using a proprietary database from one of the largest state-owned commercial banks in China, we find that the bank’s internal credit rating scores substantially improve the accuracy of default prediction. While the internal credit rating does incorporate firm-specific hard information such as financial ratios derived from financial statements, it is the soft information component of these ratings that contributes to the improvement in assessing credit quality. In addition, to what the extent that soft information prevails over hard information depends on the depth of the lending relationship. When evaluating loan delinquency, a strong lending relationship allows soft information to substitute, rather than complement, the role of hard information, especially the hard information that is subject to easy manipulation by Chinese firms.
Presenter Introduction：
Dr. Chun Chang is Professor of Finance and the holder of ABN AMRO Chair in Risk Management at CEIBS. Prior to joining CEIBS, Professor Chang has taught at Carlson School of Management, University of Minnesota for 17 years. He is the first who came out of People’s Republic of China to teach finance in an American university. He is also the first scholar to return and work in China on a full time basis after becoming a tenured finance professor in an American university. He is the Executive Editor of China Economic Review, the leading academic journal on Chinese economy published in English.
Dr.Chang received his Ph. D. in Managerial Economics and Decision Sciences from Kellogg Graduate School of Management, Northwestern University. His current research interests are Corporate Finance, Mergers and Acquisitions, Bank Regulation and Risk Management, Labour Economics, Economic Reforms and Development. His publications appear in Journal of Economic Theory, Journal of Finance, Review of Financial Studies, Journal of Monetary Economics, Journal of Business, Journal of Money, Credit and Banking, to name a few. Dr. Chang published the book "Corporate Finance for Chinese Entrepreneurs" in 2006 and "Corporate Finance" in 2008. He also co-authors several academic books.
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